Competing Through Sustainability
Volunteerism and Going Green are Reaping Dividends for Employees, Communities, and
the Environment
A growing number of companies have made sustainability an important part of their business
strategy. General Electric’s health care unit identified maternal and infant mortality as
frequent causes of death in India. For example, the infant mortality rate for India, a country
with 1.2 billion people is 55 children for every 1,000 births. GE worked with nonprofit
organizations and hospitals to understand patient and health care needs. As a result, GE
identified opportunities to help as well as gain a potential market for new products. About 700
million people can’t afford maternal or birth services. Also, to bring to market a product
required overcoming several obstacles including power outages, a lack of money and space in
hospitals for large, costly equipment, high levels of dust and pollution, and difficulty of getting
replacement parts through government bureaucracy. GE developed a baby warmer, called the
Lullaby, which provides heat for cradles. The Lullaby is targeted to help people and
communities with few financial assets. The Lullaby is easy to use: it uses only buttons with
pictures indicating their function. At General Mills, volunteerism is one of the ways that the
company lives its corporate values. The CEO and senior leaders serve on nonprofit boards and
are involved in the community.
For example, employee volunteers are helping improve the efficiency of a plant in Malawi
which produces a high-nutrient peanut butter paste that is distributed to malnourished children
across the country. Malawi has 13 million people, most are farm families living in poverty.
Pharmaceutical company Novartis supports REPSSI, an African-based philanthropic
organization that provides emotional and psychological support for children who lose their
parents or guardians to AIDS. The program began in a single district in Tanzania and has
expanded to 13 sub-Saharan African countries. The company’s trainers provide REPSSI’s
employees with leadership development training. REPSSI managers need training in
communication skills, providing feedback, intercultural skills, and project management.
Novartis transformed its corporate training programs into a form useful for REPSSI. The
training content is delivered through instructor-led courses and e-learning. Novartis and
training vendor partners, including business schools, send speakers at their own expense to
Africa. Instructors are also available for follow-up after each course is completed.
Gilbane Building Company, a construction business headquarted in Rhode Island, has a strong
commitment to sustainability. Gilbane’s High Performance Building Program is a service
offered to clients to assist with the development and implementation of energy efficiency and
sustainability goals in a project. Using building practices in which construction wastes fewer
materials and uses less energy helps to protect the environment as well as providing
customers with available tax breaks for building “green” and lower heating and cooling costs.
As a result, Gilbane can be both socially responsible and profitable.
Discussion Question
1. What are the benefits for these corporations who encourage volunteerism and “going
green”? Can you identify an organization in your own community that engages in socially
responsible practices such as encouraging employee volunteerism? In encouraging
sustainability through “green” practices?
Student responses may vary, but look for evidence that students understand the definition
of social responsibility and look for specific responses that could include the
D. Changing demographics and diversity of the workplace
1. The labor force of current employees is often referred to as the internal
labor force.
2. The external labor market includes persons actively seeking
employment.
3. Aging of the workplace
a. Figure 1.5 compares the projected distribution of the age of the
workforce in 2010 and 2020.
b. The labor force will continue to age, and the number of workers
age 55 and older will grow from 19% to 25% by 2020.
a. The labor force participation of those 55 years and older is
expected to grow because older individuals are leading healthier
and longer lies than in the past. Additionally, the high cost of
insurance and the decrease in health benefits causes many
employees to keep working to keep their employer-based
insurance.
b. The workforce is now comprised of 5 generations. Each
generation has a unique set of characteristics, some of which are
similar to other generational groups. Table 1.11 provides an
overview of the years born, nicknames, and ages of each
generation.
4. As figure 1.6 shows, the U.S. workforce is becoming increasingly
diverse. To successfully manage a diverse workforce, managers must
develop a new set of skills, including:
a. Communicating effectively with employees from a wide variety
of cultural backgrounds.
b. Coaching and developing employees of different ages,
educational backgrounds, ethnicity, physical ability, and race.
c. Providing performance feedback that is based on objective
outcomes rather than values and stereotypes that work against
women, minorities, and handicapped persons by prejudging the
persons’ abilities and talents.
d. Creating a work environment that makes it comfortable for
employees of all backgrounds to be creative and innovative.
4. Managing cultural diversity can provide a competitive advantage to
companies (See Table 1.12).
E. Legal Issues
1. Several areas in the legal environment have influenced HRM practice:
emphasis on eliminating discrimination in hiring and employment, safety
and health legislation, pay and benefits legislation – in particular
healthcare reform. Most recently, healthcare reform will force employers
of 50 or more people full time who do not offer healthcare coverage to
pay a $2,000 penalty per employee. Other areas of concern are
employment of illegal immigrants, data security, and intellectual property
issues. Companies will look to the HR department for guidance in these
areas.
F. Ethical Issues (Figure 1.7 outlines the principles of ethical companies)
1. Ethics are the fundamental principles of right and wrong by which
employees and companies interact. Ethical criteria should be used in
company and employee interactions. Ethical principles include the
emphasis of mutual benefits, employees assuming responsibility for
company actions, a meaningful corporate vision for employees, and
fairness.
2. The Sarbanes-Oley Act of 2002 is a congressional act that sets strict
rules for ethical corporate behavior – especially in regards to accounting
procedures, setting heavy fines and prison terms for noncompliance.
Integrity in Action
Leading a Turnaround Through People Practices
Many CEOs don’t practice what they preach, but that isn’t the case for Bob Flexon, CEO of
Dynergy, Inc. Flexon works out of a cubicle similar to the ones occupied by other employees at
the company’s headquarters. This is one of many changes Flexon made in policies and practices
in hopes of revitalizing the employees and growth of the power generation company, which
recently emerged from bankruptcy. He cut costs (saved $5 million) and increased interactions
between employees by moving the company headquarters offices to a single open floor. He also
is visible at the company’s power plants, banned employees from checking email and phones
during meetings, and reinstated annual performance reviews. The company’s highest ranking
managers participated in a two-day offsite meeting including trust building exercises. Managers
resisted attending the offsite meeting and many did not want to exchange their private offices
for cubicles. Flexon also led the development of a new purpose statement for the company
(“Energizing You, Powering Our Communities”) and placed a specific emphasis on three of the
six company core values including safety, accountability, and agility (the other company values
are responsibility, integrity, and collaboration). The company estimates it will have spent over
$400,000 by the end of the year to train managers in the new culture. Flexon and his
management team personally introduced the new culture to employees through plant visits. To
reinforce the new culture 15 employees have been trained as “culture champions” whose role it
is to insure that fellow employees’ behavior is consistent with the new policies and practices.
The culture is also reinforced in performance management. One part of the revised performance
management process includes managers evaluating employees on the extent to which they
behaved in accordance with the core values.
What are the results of the CEO’s efforts? Employee turnover is down from 8% to 5.8%.
Morale is up and employees know that safety is a serious issue. The bottom line still needs to be
fixed (the company lost over $1 billion for the first nine months of 2012) but Flexon believes
that the new culture and people practices will make a difference in creating profits.
DISCUSSION QUESTION
Which HR practices do you think have the greatest influence on a company’s turnaround effort?
Which have the least influence? Explain your choices.
Student responses may vary, but look for evidence that students understand the important
linkage between organizational leadership, contact with management, HR practices and
G. The Global Challenge
1. Entering International Markets – In order to survive, U.S. companies must,
improve HRM practices, develop global markets and better prepare
employees for global assignments.
a. Development of Global Markets. The most admired and
successful companies in the world have not only created
multinational corporations, but have created organizations with
b. Global business expansion has been made easier by technology.
c. Globalization has affected not only businesses with international
operations. Companies without international operations buy or
e. U.S. companies must do a better job of preparing employees and
2. Offshoring refers to the exporting of jobs from developed countries to
less developed countries. Reshoring refers to moving jobs from
overseas to the United States.
Competing Through Globalization:
Bon or No Bon: Is It Better to Criticize or Adapt to a Country Culture?
Maurice Taylor is chairman and CEO of Titan International, which was considering buying a
tire factory in northern France. He is known for his nononsense management style. Titan
wanted to buy an unprofitable factory put up for sale by Goodyear Tire & Rubber. But it
decided to pull out of negotiations for the factory when union employees would not work
longer hours to save jobs. Taylor had visited the factory several times and offered to keep
about half the factory staff for two years, but his proposal was rejected by the union, which
wanted their jobs secure for seven years. In response to his frustration at being unable to
negotiate favorable terms for the purchase of the factory, Taylor sent a letter to France’s
Industry Minister, who had requested that Taylor continue to negotiate for the plant. His letter
harshly criticized France and the union. He stated that it would be stupid to operate in a
country where workers get high wages for little work. For example, he pointed out that the
French workforce gets paid high wages but works only three hours a day. The other hours are
spent on lunch, breaks, and discussion among employees. In the letter he went on to suggest
that France was not a competitive country for U.S. investment and stated that Titan was going
to purchase a Chinese or Indian tire factory, pay less than one euro per hour wages (less than
three dollars), and ship all the tires that France needs without having to employ their workers.
France does have labor laws that make it expensive to fire employees. Recently, recognizing
the potential barrier that employment regulations pose to getting foreign businesses to locate
there, France has moved to push employers to try to agree with unions on more flexible
conditions of employment. France’s President Francois Hollande’s labor reform plans include
allowing companies to reduce employees’ hours and wages in difficult economic conditions,
change regulations related to layoffs, and limit the time employees can appeal layoff decisions.
Will France lose all of its industrial business as claimed by Taylor? In response to Taylor’s
letter, France Industry Minister Arnaud Montebourg responded that France ranks as one of the
leading destinations for company investment. He also pointed out that Taylor’s comments
were both extreme and insulting and illustrated his ignorance of France.
DISCUSSION QUESTION
Should the CEO have insisted that the French adopt work hours and rules that were similar to
what we have in the U.S.? Why or Why not? What things could he have done to reach a deal
for the plant that was more closely aligned with U.S. work policies and practices?
Student responses will likely be varied from a culturally insensitive extreme of ethnocentrism
As such, to come in and “demand” compliance with traditions and employment practices that
are completely unfamiliar to an entire workforce would spell disaster. It is also a useless tactic
SOURCE: G. Parussini, “U.S. CEO to France How Stupid Do You Think We Are?” Wall
Street Journal, February 21, 2013, p. B1; E. Jarry and C. Bremer, “U.S. Tire Executive Calls
French Slackers,” The Columbus Dispatch, February 22, 2013, p. A2.
H. The Technology Challenge
1. Advances in sophisticated technology along with reduced costs for the
2. Social Networking refers to websites and blogs that facilitate interactions
Competing Through Technology:
Connectiveness Enhances HR Practices
Social networks such as Facebook and Twitter help people satisfy their need to be connected to
their friends. Recognizing the importance of “connectiveness,” companies of all sizes and in
various industries are using social networks to enhance many different HR practices including
recruiting, training and development, scheduling, and enhancing employee’s engagement.
Recruiters can use social networking to connect and communicate with job candidates, create
online communities for job candidates to learn about the company, and monitor news such as
store closings or layoffs which can provide a potential group of new employees. Macy’s has
used Twitter to post job openings and to reach out to recruit merchandise buyers laid off by
other retailers who were closing their stores. CareerBuilder.com is using an app that shows its
employees which of their Facebook friends would be matches for job openings at the company
and encourages them to share that information. Del Frisco’s Steakhouse in Manhattan can
quickly create a schedule for its servers on a computer or i-Phone and post it to a website
which automatically sends the schedule to all employees’ cell phones. Servers can make
schedule changes but the system tracks hours to ensure that they do not exceed allowed
overtime work hours. Long Realty in Tuscon, Arizona, established Long Connects, an internal
social networking site for real estate agents to seek help and discuss issues such as how to deal
with a specific bank to secure financing, trends in the current real estate market, and the best
way to handle properties sold for less than the amount owed on the mortgage to avoid
foreclosure (short sales).
Verizon uses social networking tools to train employees to support new products and devices.
Device Blog, Device Forum, and Learning Communities help insure that employees are ready
to support customers when new products and devices are introduced to the market, engages
Verizon’s multigenerational workforce, and facilitates peer-to-peer learning. Device Blog
makes available information and updates on wireless devices (such as DROID), FAQs
(frequently asked questions), how-to-videos, and troubleshooting tips. Device Forums enable
retail employees to learn from peers and product manufacturers. Employees can ask each other
questions, share issues, post tips, make suggestions, and access product experts. Learning
Communities are accessed through the Device Blog. They include video blogs, message
boards, links to online training modules, and product demonstrations. In addition to these
tools, employees have access to My Network for collaborating with their peers, knowledge
and document sharing, and creating working groups. Some instructors also use it for posting
supplemental content for learners use.
DISCUSSION QUESTION
1. What are some of the potential disadvantages of using social networks or microblogs such
as Twitter for HR practices?
Students may identify the positives of such practices, but there is the potential for a
loss of “community” and in-person identification and connectedness through the use of
2. Explain how social networking can be used for various HR practices. Can you think of other
ways that the HR function in an organization can use Twitter, Facebook, LinkedIn, or other
types of social networking? Also, are companies limited to using popular applications such as
these in order to achieve the benefits of connectivity, or are their other ways of doing so?
Provide examples.
Companies use various forms of social networking tools to enhance and support HR
practices, and they are not limited to well known systems such as Twitter, LinkedIn, or
Facebook. Students may give various examples: Long Realty’s use of “Long Connects”
SOURCES: Based on M. Rafter, “Goin’ Mobile,” Workforce Management, February 2011, pp.
26–27; L. Stevens, “Through the Looking Glass,” Human Resource Executive, April 2011, pp.
26–29; M. Ciccarelli, “It’s Personal,” Human Resource Executive, September 16, 2010, pp. 1,
14–20; B. Roberts, “Mobile Workforce Management,” HR Magazine, March 2011, pp. 67–69;
G. Kranz, “More to Learn,” Workforce Management, January 2011, pp. 27–30; S. Ladika,
“Socially Evolved,” Workforce Management, September 2010, pp. 19–22; B. Roberts,
“Developing a Social Business Network,” HR Magazine, October 2010, pp. 54–60;
M. Weinstein, “Verizon Connects to Success,” Training, January/February 2011, pp. 40–42.
3. Human Resource Information Systems (HRIS) are systems companies
use to acquire, store, manipulate, analyze, retrieve and distribute HR
information. These data can include personal information, training
records, skills, compensation rates, absence records, and benefits
information. An HRIS may be used to support strategic decision-making
and ensure legal compliance, as well as to evaluate programs and policies
or support daily operating concerns.
Example: Florida Power & Light Company in Juno Beach, Florida uses
its HRIS to support decisions and provide information to its employees.
Managers can track vacation and sick days as well as change staffing and
pay levels for their more than 10,000 employees using the system. It also
allows managers to create their own personnel reports, rather than having
to rely on the HR department to create them.
4. Cloud Computing refers to computing system that provides information
technology infrastructure over a network in a self-service, modifiable,
and on-demand model.
5. An HR dashboard is an HR metrics such as productivity, absenteeism
that are accessible by employees and managers through the company
intranet or human resource information system.
6. A High Performance Work System is a work system used to maximize
the fit between the company’s social system and technical system. An
example would be a computer-integrated manufacturing system that uses
robots and computers to automate the manufacturing process. The
computer allows the production of different products simply by
reprogramming the computer. As a result, laborer, material handler,
operator/assembler, and maintenance jobs may be merged into one
position.
7. A Virtual Team is a team that is separated by time, geographic distance,
culture, and/or organizational boundaries and that rely almost exclusively
on technology (e-mail, Internet, videoconferencing) to interact and
complete their projects.
8. Human resource management practices that support high-performance
work systems are shown in Table 1.14.
VII. Meeting the Competitive Challenges through HRM Practices – HRM practices that help
companies respond to the four competitive challenges can be grouped into the following
four dimensions. (See Figures 1.8 and 1.9)
A. Figure 1.8 provides examples of how HRM practices can be used by companies
to meet global, sustainability and technology challenges.
B. Figure 1.9 outlines the major dimensions of HRM practices that contribute to the
competitiveness of the firm.
1. Managing the Human Resource Environment—HRM practices should be
linked to strategy, legal compliance must be assured, and work should be
designed to maximize employee effectiveness and motivation.
2. Acquiring and Preparing Human Resources—Human resource planning
must occur, employees must be recruited and placed in appropriate jobs,
methods of employee selection must be determined, and ensuring employees
have skills to perform particular jobs.
3. Assessment and Development of Human Resources—This area of HRM deals
with measuring employee performance, preparing employees for future work
roles, identifying and responding to employee interests, and creating a
beneficial and effective work environment.
4. Compensating Human Resources— Appropriate pay systems must be
developed, employee contributions must be rewarded, and employees must be
provided with benefits.
5. Special Issues—Labor unions create an additional HRM challenge.
VIII. The final paragraph and Table 1.15 present the overall organization of the text.